Monday, January 20, 2014

Changes Coming to Games Workshop

From talking with other stores and confirmed by my Games Workshop representative, GW players and stores will see a couple of significant changes coming along in the next few months, likely designed to drive customers into stores for new releases moreso than the current business model accommodates.

As a business, and from the company’s owners and shareholders point of view however, Games Workshop has done quite well over the past few years.   As the Masterminis website points out  a share of GW stock purchased in 2008 would have sextupled in value (that’s six times, by the way) over the next five years.  If an investor, that’s a pretty good rate of return.  Unfortunately, what the market gives, it also taketh away.  As Masterminis also notes, on January 16th, after GW released sales figures showing sales for the past six months down 12%, the stock price dropped 24% in one day.   That’s a lot of shareholder value gone bye-bye very quickly.  Imagine going to bed with a nice crisp $100 bill tucked away in your wallet and waking the next morning to find the fairies had replaced it with 3 twenties, a ten, a five and a one. That’s how those stockholders feel.  While Games Workshop management probably did not expect the market to punish them so hard for the 12% sales drop (maybe they did, I do not know), they certainly had to expect some negative response (One of the problems of running a publicly traded company like Games  Workshop is that shareholders expect positive results every quarter or half year, making it much harder to plan strategy for the longer term).  Hence, changes in the business plan designed to turn around the sales decline.

First, Finecast will go away, or at least, from my understanding, only get used for the Hobbit line of figures.  The preponderance of 40K and Fantasy Battle figures will be plastic.  There may be a few metal figures in there but very limited.  

I am glad to see this happening.  The store had numerous complaints about GW’s Finecast figures either breaking or bending, while customer viewed the detailing of the scupts, originally a major selling point for Finecast, as adequate at best.

Second, new releases will now occur weekly, rather than once or twice a month. This accomplishes two things. One,  from the viewpoint of sales, it will bring in GW customers on a weekly basis to check out the new releases and two, from the store’s viewpoint, it means we don’t get hit with a large invoice once week out of the month.  In the months when GW would release a new Codex or Army book, even a smallish store like ours could get hit with an invoice topping $1500 for one week’s order.

Third, and the most noticeable change from the customer’s point of view, GW’s decades old magazine White Dwarf shifts from a $10 monthly  to a $4 weekly, only available through retail stores, with a monthly Warhammer Visions magazine debuting at about the same time.  I felt somewhat leery about this change, given that we have a pretty good sell through on the monthly magazine, but our customers have so far embraced it.  The first issue of the new format hasn’t even shipped yet and we already have three customers adding to their hold lists.  That bodes well, but we will have to see what happens long term.

So far, I like the changes in GW but will have to see how our customers respond as they make the ultimate decisions.

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